14/08/2008 - 13:19

Stirling secures PetQuench deal

14/08/2008 - 13:19

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Perth-based Stirling Products Ltd has acquired the worldwide licensing rights for the product PetQuench with sales expected to be in excess of $25 million over the first five years.

Perth-based Stirling Products Ltd has acquired the worldwide licensing rights for the product PetQuench with sales expected to be in excess of $25 million over the first five years.

In a statement, Stirling said PetQuench is a fortified water for dogs and cats, and is already on the market in North America and is expected to be launched in Australia during the first quarter of 2009.

 

Below is the full announcement:

 

Stirling Products (ASX:STI) advises shareholders that it has now completed the
transaction to acquire worldwide licensing rights for the product PetQuench™. PetQuench™, fortified water for dogs and cats, is already on the market in North America and is expected to be launched in Australia by the end of Q1 2009. The company expects sales of the product to be over $25 million in the first five full years of
sales. PetQuench™ is a unique presentation in a market sector that currently returns in excess of US$42 billion (global pet food sales).
CEO and Managing Director of Stirling Products said "It is refreshing to close a deal like
this in such a short period of time. It has only been just over two months since we announced the signing of the term sheet for this product (ASX, June 4 2008). We are undertaking the next production run in Canada in order to have new stock on the shelves
in September and hope to soon complete a production run in Australia for a market launch early next year".
Under the terms of the agreement, all global sales of PetQuench™ becomes Stirling's
sales revenue in exchange for which it pays a combination of on-going consultancy fees
and a royalty payment. The royalty payment starts at 5% for the first five years and then drops to 2.5% for the duration of the agreement which is a minimum of ten years.
President of Aquience Inc, Mr Derrick Walker said "We are very happy to have formed a
partnership with Stirling Products. PetQuench™ will now have the opportunity to be truly
global and has an outstanding pedigree in the form of Stirling Animal Health (SAH) to support it." Mr Walker also said "The new company would bring products to the market
that are based on the most current and up-to-date research in animal health. SAH is a company that has been formed by pet owners in both Canada and Australia with the support of a truly innovative veterinary pharmaceutical company in Australia."

As part of the Agreement the founders of Aquience have agreed to a three-year consultancy as part payment for the rights to the product, which Stirling has the option to acquire outright in year 4. "Stirling gain access to sales and marketing expertise and additional development experience from the founders of Aquience, both of whom have had long and productive careers in the pet and commercial development arena. Together under the newly formed Stirling Animal Health subsidiary, we have already planned a product development pipeline with no less than five products expected to be launched over the next 12 -18 months," commented Dr London. Co-founder and Vice President of Aquience, Mr Mike Ramsay indicated "The philosophies of the two companies are ideally suited to this venture. Both are focused on developing high value solutions to the pressing problems of pet ownership in the modern world. Not only have we identified the root cause of a number of major concerns, but we are also developing novel solutions to satisfy both the needs and wants of the owner and pet alike," he said. Australia has one of the highest incidences of pet ownership with over half of all houses owning either a dog or a cat. Added to the increasing incidence of pet ownership in South East Asia, China and Japan, SAH is hoping to become an integral part of the $7 billion expenditure forecast on dog and cat foods and food related items. "Since announcing the formation of SAH and the term sheet with Aquience, we have had several legitimate enquiries for distribution agreements in South East Asia and even Europe. We intend to maximise these relationships and together with an increasing presence in North America, establish conduits into the global pet market," indicated Dr London.

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